A Sleeping Giant: The Hidden Side Effect of Medicaid

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As Medicaid enrollments increase due to people signing up for Obamacare there is a little known consequence lurking and the public will be caught unaware and unprepared. It is a sleeping giant called MERP.

Do you know what the Federal MERP laws are and how they can affect you and those around you? The Federal Medicaid laws which are in effect in most states require each state to have a Medicaid Estate Recovery Program (MERP). (This is not to be confused with the Medical Expense Reimbursement Plan which is any plan or arrangement under which a business reimburses an employee for out-of-pocket medical expenses incurred by employees or their dependents.) The states all have a Department of Aging and Disability Services which manages the MERP – Medicaid Estate Recovery Program. Under MERP the states may file a claim against the estate of a deceased Medicaid recipient. The cost of services, prescriptions, and hospital care can all be claimed by the state they reside in. Come January 2014 Obamacare expands Medicaid eligibility to include all families at or below 133% of the poverty level. There is going to be a significant increase in the number of Medicaid recipients.

Thanks to OBRA 93 (Omnibus Budget Reconciliation Act) passed by congress in 1993 and TEFRA 1982 (Tax Equity and Fiscal Responsibility Act) TEFRA liens may be placed on real property in local land recording office. This prevents the gifting of a home to a non-disabled adult child or any other person before the state can file a claim against the property. Considering how much money is put out by states to cover the medical expenses of Medicaid recipients perhaps it is justified. However what if your health insurance carrier came after your home upon your death when you wanted your children to inherit it. Now how can that seem right?

When an individual has a private health insurance company, the company is paid premiums which offset the expense of insuring individuals. When that individual dies the insurance company will not come take the family home. No one would want to buy health insurance from a company that would come after the estate.

So why is it okay for the government to come after the estate of Medicaid recipients? You might think that it is okay because they do not pay premiums. Think again. Many, if not most, Medicaid recipients do pay premiums. The amounts they pay are small compared to what middle income individuals pay in premiums for private insurance, yet when compared to their income it is relevant.

With Obamacare the elderly who have been on Medicare will be rolled off of Medicare onto Medicaid. This is going to have an adverse effect on all Americans as we watch the government take the property of our loved ones as they pass. It is not just the 90 year old grandfather who won’t be able to leave his house to his grandson; it is the 55 year old dad who got cancer and ended up on Medicaid toward the end who can’t leave it to his healthy thirty year old son. This can be rightly called a “Death Tax.”

Here’s a question for you to ponder? When the government gets in total control of the health care system, will MERP eventually apply to everyone? Now a “Death Tax” is just a little something to think about.